Report. Development of Forestry Certification for Value Adding of Timber Exports for Solomon Islands

Transcription

1 Report Pacific Horticultural and Agricultural Market Access (PHAMA) Program Development of Forestry Certification for Value Adding of Timber Exports for Solomon Islands 4 August Version 1.0 Prepared for: Department of Foreign Affairs and Trade Prepared by URS Australia Pty Ltd APAC

2 DOCUMENT PRODUCTION / APPROVAL RECORD Issue No. Name Signature Date Position Title Prepared by Checked by Approved by Andrew Piper 4 August 2014 Senior Consultant Dale Hamilton 4 August 2014 Technical Adviser Sarah Nicolson 4 August 2014 Principal-in-Charge Project: Pacific Horticultural and Agricultural Market Access (PHAMA) Program DOCUMENT REVISION RECORD Issue No. Date Details of Revisions Report Name: Development of Forestry Certification for Value Adding of Timber Exports for Solomon Islands Status: Final Client Contact Details: Department of Foreign Affairs and Trade R.G. Casey Building John McEwen Crescent Barton, ACT 0221 Australia Issued by: URS Australia Pty Ltd Level 27, 91 King William Street Adelaide, SA 5000 Australia T: F: Document copyright URS Australia Pty Ltd No use of the contents, concepts, designs, drawings, specifications, plans etc. included in this report is permitted unless and until they are the subject of a written contract between URS Australia and the addressee of this report. URS Australia accepts no liability of any kind for any unauthorised use of the contents of this report and URS Australia reserves the right to seek compensation for any such unauthorised use. Document Delivery URS Australia provides this document in either printed format, electronic format or both. URS Australia considers the printed version to be binding. The electronic format is provided for the client s convenience and URS Australia requests that the client ensures the integrity of this electronic information is maintained. Storage of this electronic information should at a minimum comply with the requirements of the Electronic Transactions Act 2000 (Cth) , Version 1.0, 4 August 2014 J:\ADE\ \5 Works\STA Reports Phase 2\Tech Report 66 SOLS10\TR 66 SOLS10 (Stage 3) Forestry Certification for Value Adding Solomon Islands Timber Exports v1.0 (FINAL).doc

3 TABLE OF CONTENTS EXECUTIVE SUMMARY... IV 1 INTRODUCTION Background Stage 3 Objectives Stage 3 Proposed Deliverables DEVELOPMENTS IN THE SAWN TIMBER SECTOR Timber Production and Exports Employment in the Timber Industry PROJECT ACTIVITIES Key Achievements Progress against Deliverables Additional Stage 3 Scope Items PROJECT OUTCOMES Legality Assurance Guidelines The Industry Working Group Co-endorsement of a Country-Specific Guideline Strengthening of Monitoring and Verification Systems Review of Implementation Budget Requirements for Monitoring and Verification Budget Status Consideration of Further Work Continuation of the Industry Working Group Ongoing Support for Implementation of MOFR Monitoring and Verification Systems Key Next Steps LIMITATIONS TABLES Table 2-1 Annual export value of Solomon Islands sawn timber ( )... 4 Table 3-1 Progress against Stage 3 objectives and deliverables... 8 Table 4-1 Activities identified by the IWG and their current status FIGURES Figure 2-1 Annual value (SBD) of Solomon Islands timber exports by destination country ( )... 5 Figure 2-2 Quantity of hardwood sawn timber imports to Australia by country (2012)... 5 Figure 2-3 Quantity of hardwood sawn timber imports to New Zealand by country (2012) , Version 1.0, 4 August 2014 i

4 PLATES Plate 4-1 MOFR staff verifying the source of timber at a sawmill in Honiara, July APPENDICES Appendix A Appendix B Appendix C Appendix D Appendix E Appendix F Appendix G Bilateral Engagement on Development of Country-Specific Guideline Country-Specific Guideline Timber Legality Guidelines Revised Permit to Export Documents Procedure for Monitoring and Verification Workshop Discussion Paper on Cost Recovery from MOFR Verification Activities , Version 1.0, 4 August 2014 ii

5 ABBREVIATIONS Abbreviation ACIAR AUD CBSI CSG DAFF DFAT IACT IWG m 3 MAWG MOFR N/A PARDI PHAMA SBD SICCI TUD URS USD VLO Description Australian Centre for International Agricultural Research Australian dollar Central Bank of Solomon Islands Country-Specific Guideline (former) Australian Government Department of Agriculture, Fisheries and Forestry Department of Foreign Affairs and Trade Increasing Agricultural Commodity Trade (Timber) Industry Working Group Cubic metres Market Access Working Group Solomon Islands Ministry of Forestry & Research Not applicable Pacific Agribusiness Research for Development Initiative Pacific Horticultural & Agricultural Market Access Program Solomon Islands dollar Solomon Islands Chamber of Commerce and Industry Timber Utilisation Division URS Australia Pty Ltd United States dollar Verification of Legal Origin , Version 1.0, 4 August 2014 iii

6 EXECUTIVE SUMMARY The Australian Government s Pacific Horticultural & Agricultural Market Access Program (PHAMA) engaged URS Australia Pty Ltd (URS) to conduct activities to support forestry certification encompassing timber legality assurance for exports of sawn timber from Solomon Islands. The project has been conducted over three stages, starting during October This report relates to Stage 3 of the project, which was primarily conducted between October 2013 and March 2014 and then extended to June 2014 in order to complete some specific scope items. This report describes the Stage 3 activities and outcomes, and makes recommendations for PHAMA s continuing support in maintaining and enhancing international market access of the sawn timber sector of Solomon Islands. Key Achievements Key achievements from Stage 3 of this project include the following: 1. Continued and extended bilateral engagement with the Australian Government on development of a Country-Specific Guideline [CSG] for Solomon Islands, which was initiated during Stage 2. Final co-endorsement of the CSG occurred on 12 May Solomon Islands is the first and only country for which such a guideline has been developed for inclusion in the Australian Illegal Logging Prohibition Amendment Regulation Refer to relevant correspondence and newspaper articles attached in Appendix A and the Guideline documents in Appendix B. 2. Distributed and promoted copies of the Timber Legality Assurance Guidelines for Solomon Islands that were developed in Stage 2, among processors and exporters and other stakeholders. This has been further supported by professional printing of the legality assurance guidelines as a field manual during May The updated print version of the guidelines is attached in Appendix C. 3. Continued facilitation of the Timber Industry Working Group (IWG), which has led to strengthened engagement and collaboration between government and the private sector. The IWG has become a valuable and effective stakeholder forum, providing useful input and feedback on all of the activities and outcomes of Stage Worked with the Ministry of Forestry and Research (MOFR) to review and update the documentation used to underpin the CSG, namely the Permit to Export Forest Produce and the Application for the Permit to Export Forest Produce. The revised documentation has been in use since January 2014 and is attached in Appendix D. 5. Developed a Procedure for Monitoring and Verification of Timber Legality, in consultation with the IWG and MOFR, which outlines monitoring and verification systems that are being used by MOFR to strengthen timber legality assurance, including inspections of timber yards and additional verification measures to confirm timber source. Implementation of the procedure began during March The procedure is attached in Appendix E. 6. Conducted a successful workshop with industry and government stakeholders in relation to the planned monitoring and verification activities (as outlined in the procedure). Further information on the workshop and outcomes is provided in Appendix F. 7. Worked with MOFR to identify budget requirements for the necessary monitoring activities of the Timber Utilisation Division (TUD), as well as produce related , Version 1.0, 4 August 2014 iv

7 documentation of this budget need. This is to form the basis for submissions to the annual Solomon Islands Government budget process during July August Developed a discussion paper with MOFR exploring revenue and cost recovery mechanisms from its timber monitoring functions. The paper has been used as the basis for internal discussions among senior staff and includes the required budget for TUD monitoring activities (see #7 above). It is attached in Appendix G. Next Steps Subject to further support being made available through MOFR, the Solomon Islands timber industry, and potentially donor-funded programs, the key next steps proposed are engagement on the scope to provide support to activities as prioritised by the IWG in the forest sector industry plan. Specifically: 1. Supporting industry focus on access to higher value markets, and in working to strengthen timber grading systems and export product consistency. 2. Considering further support for implementation of MOFR monitoring and verification systems, including an additional input to review the systems during September October , Version 1.0, 4 August 2014 v

8 1 INTRODUCTION The Australian Government s Pacific Horticultural & Agricultural Market Access Program (PHAMA) engaged URS Australia Pty Ltd (URS) to conduct activities to support forestry certification encompassing timber legality assurance for exports of sawn timber from Solomon Islands. The project has been conducted over three stages. The first stage (Stage 1) of this project was conducted between October 2012 and February The Stage 1 outcomes are described in the previous report Technical Report 42: Development of Forestry Certification for Exports of Value-added Timber Products from Solomon Islands dated 13 February The second stage of the project was conducted between February and June The Stage 2 outcomes are described in Technical Report 53: Development of Forestry Certification for Exports of Value-Added Timber Products from Solomon Islands Stage 2 Completion Report, dated 12 September This report relates to Stage 3 of the project, which was conducted between October 2013 and March 2014 and then extended to June 2014 in order to complete some specific scope items. This report describes the Stage 3 activities and outcomes, and makes recommendations for PHAMA s continuing support in maintaining and enhancing international market access of the sawn timber sector of Solomon Islands. 1.1 Background Forest product exports are the largest export industry by value from Solomon Islands (annual trade of approximately AUD240 million). Most exports are in log form, with only limited exports of sawn timber (annual trade of approximately AUD12.5 million). Current levels of logging are widely recognised as being unsustainable, and revenues from log exports are predicted to decline over the coming few years. Solomon Islands Government policy is to diversify and increase the level of value-added processing of timber for export. Internationally, consumer concerns over illegal logging and the sustainability of timber harvesting particularly extraction of tropical hardwood species arising from natural forests (on which the Solomon Islands industry is based) has seen increasing use of sustainable forestry certification schemes and timber legality requirements to provide assurance to consumers regarding the origin and sustainability of timber and timber products traded. Major timber importing countries, including Australia, the European Union countries and the United States of America, have enacted legislation requiring importers to complete various due diligence to ensure their products are of a legal origin. In addition, a number of importers of timber request some form of certification or accreditation from their overseas suppliers attesting to origin from sustainably managed and legally harvested resources. At present, there is only limited use being made of such certification schemes in Solomon Islands, and potential exists for timber trade to be substantially influenced by these emerging legislative and market-driven requirements of timber importers to handle demonstrably legal timber only. Against this context, the Solomon Islands Market Access Working Group (MAWG) requested that PHAMA investigate the merits of further promoting schemes of this nature. URS was engaged to conduct this investigation as Stage 1 of SOLS10 between October 2012 and January The findings of Stage 1 (Technical Report 42) determined that there was value in establishing a legal production certification system for Solomon Islands in order to meet the , Version 1.0, 4 August

9 impending market access requirements for countries such as Australia. A series of staged activities were then undertaken as Stage 2 of the activity: (i) Explore the potential for establishing an Industry Working Group (IWG) for sawn timber exports (ii) Support the promotion of Solomon Islands capacity to demonstrate Verification of Legal Origin (VLO) of timber (iii) Scope and develop a VLO checklist or toolkit (iv) Scope and develop a Verification of Legal Compliance checklist or toolkit building upon VLO processes (v) Engage with Increasing Agricultural Commodity Trade (IACT) program (and potential certification providers) to explore the potential for provision of certification support services in Solomon Islands. This work was completed between March and June As a result of this, an IWG was established, comprising sawn timber exporters, government representatives and other stakeholders. This group helped to inform the development of legality assurance guidelines and checklists, which were subsequently shared as part of initial bilateral discussions with Australia. At completion of this work, the Stage 2 outcomes report (Technical Report 53) made a series of recommendations regarding potential follow-on activities in Phase 2. These have been validated and prioritised by the IWG. Subsequently, the Solomon Islands MAWG approved the implementation of the top three priority activities identified in that plan. This tasking note reflects the scope of that work as Stage 3 of the SOLS10 activity. 1.2 Stage 3 Objectives The activities undertaken as part of Stage 3 were born of the recommendations made in the Stage 2 Final Report. There were five key objectives for Stage 3 outlined in the Tasking Note. These were: 1. Provide technical assistance to support the IWG in further development of timber legality assurance systems in Solomon Islands; 2. Assist the Ministry of Forestry and Research (MOFR) with the distribution and implementation of the guidelines; 3. Support MOFR in exchanges with the Australian Department of Agriculture, Fisheries and Forestry (DAFF) to complete the bilateral processes to develop Country-Specific Guidelines [CSGs]; 4. Assist MOFR and Industry in determining appropriate strengthening measures to improve verifications systems that underpin licensing and permitting systems for export; and 5. Assist MOFR in determining resourcing requirements, and identifying appropriate government budget and other funding sources, to ensure appropriate verification activities can be sustained; including examination of licencing revenue structure and potential improved cost recovery mechanisms. 1.3 Stage 3 Proposed Deliverables In seeking to meet these objectives, proposed deliverables for Stage 2 were: 1. Completion of distribution and awareness activities on legality assurance guidelines with all key stakeholders , Version 1.0, 4 August

10 2. Completion of bilateral process with Australia to develop recognised CSGs. Noting that this will be dependent, in part, on Australian Government timeframes. 3. Development and communication of revised and strengthened verification systems and documentation. 4. Development and communication of a plan for implementation for the improved verification systems. This may include the need for supporting stakeholder consultations within selected provincial areas and a broader stakeholder workshop. 5. Completion of an analysis of MOFR budget and resourcing needs to sustain required appropriate verification activities. Including identification of potential funding sources and development as required of budget bids, budget narratives or similar documentation; and analysis and recommendations regarding fees and licensing revenues structure and other potential cost recovery mechanisms. 6. A completion report detailing progress made in regard to tasking objectives; the development of CSGs and strengthening of verification systems as appropriate for Solomon Islands needs. Report is to include recommendations in regard to the implementation of further support and activities (with reference to the PHAMA Phase 2 Plan for Forestry Sector). In the report, consideration shall be given to any opportunities to coordinate resourcing with other development programmes (including Australia s bilateral aid programme in Solomon Islands). This report presents the progress against the above objectives and deliverables as at 30 June , Version 1.0, 4 August

11 2 DEVELOPMENTS IN THE SAWN TIMBER SECTOR An overview of the sawn timber sector in Solomon Islands has been provided in the Stage 1 and Stage 2 reports. Following is an updated summary of parts of this presented previously profile, specifically focused on economic and trade information. 2.1 Timber Production and Exports The trade in sawn timber exports during 2013 was approximately SBD81.5 million (Central Bank of Solomon Islands [CBSI] 2014). While sawn timber exports from Solomon Islands constitute a small proportion of the round log export trade, it makes a substantial contribution to the national trade in goods and is comparable in size to the cocoa and copra sectors. The sector has been increasing in size and value during recent years. In its annual economic outlook, CBSI noted that sawn timber for the domestic and export markets is expected to rise further and boosting rural income (CBSI 2013). Table 2-1 shows the annual value of sawn timber exports over the past 5 years. Table 2-1 Annual export value of Solomon Islands sawn timber ( ) Year Value (SBD) ,672, ,846, ,294, ,340, ,421,000 Source: CBSI (2014) Australia and New Zealand have traditionally been the two largest markets for sawn timber from Solomon Islands. In contrast to previous years, data from CBSI shows that the value of exports into New Zealand was higher than those to Australia. Philippines was the third largest market during 2013, and has increased in value over the past 3 years. Other important markets include China, Taiwan and, more locally, New Caledonia. Figure 2-1 shows the main international markets for Solomon Islands sawn timber by foreign exchange receipts between 2011 and , Version 1.0, 4 August

12 Figure 2-1 Annual value (SBD) of Solomon Islands timber exports by destination country ( ) Value (million SBD) Source: CBSI, trade in goods account (2014) Solomon Islands is currently the fourth largest exporter of hardwood sawn timber to Australia and the second largest exporter to New Zealand. Figure 2-2 and Figure 2-3 show the volume of sawn timber imported into Australia and New Zealand from Solomon Islands relative to other countries. The corresponding value of this trade during 2012 was USD4.3 million for export to Australia (approximate unit price of USD950/m 3 ) and USD2.7 million for exports to New Zealand (approximate unit price of USD750/m 3 ) (Global Trade Atlas 2013). This difference in the average unit price paid in Australia and New Zealand in part reflects species preferences. The main species sold to the Australian market is Rosewood, which is a higher value species than Vitex, the main species sold to New Zealand. Figure 2-2 Quantity of hardwood sawn timber imports to Australia by country (2012) 30 Volume ('000 m 3 ) Malaysia Indonesia United States Solomon Islands New Zealand China Papua New Guinea France Peru Sri Lanka Fiji Source: Global Trade Atlas (2013) , Version 1.0, 4 August

13 Figure 2-3 Quantity of hardwood sawn timber imports to New Zealand by country (2012) Volume ('000 m 3 ) United States Solomon Islands Indonesia Australia Fiji Guyana Philippines Peru Papua New Guinea Germany Source: Global Trade Atlas (2013) Employment in the Timber Industry Timber production and processing is a significant employer. It can be reasonably estimated that more than 1,500 people are directly employed in the sector (largely in sawmills and timber processing businesses). In addition, many others are also employed, directly and indirectly, in harvesting, shipping and transport, and associated businesses such as firewood production. There are currently approximately 50,000 people in formal employment in Solomon Islands (CBSI 2013), making the timber sector a significant contributor to national employment , Version 1.0, 4 August

14 3 PROJECT ACTIVITIES A summary of the Stage 3 project achievements and associated deliverables is set out below. 3.1 Key Achievements Key achievements from Stage 3 of this project include the following: 1. Continued and extended bilateral engagement with Australian Government on development of a Country-Specific Guideline for Solomon Islands, as initiated during Stage 2. Final co-endorsement of the CSG occurred on 12 May Solomon Islands is the first and only country for which such a guideline has been developed for inclusion in the Australian Illegal Logging Prohibition Amendment Regulation Refer to relevant correspondence and newspaper article attached in Appendix A and the Guideline documents in Appendix B. 2. Distributed and promoted copies of the Timber Legality Assurance Guidelines for Solomon Islands that were developed in Stage 2, among processors and exporters and other stakeholders. This has been further supported by professional printing of the legality assurance guidelines as a field manual during May The updated print version of the guidelines is attached in Appendix C. 3. Continued facilitation of the Timber IWG, which has led to strengthened engagement and collaboration between government and the private sector. The IWG has become a valuable and effective stakeholder forum, providing useful input and feedback on all of the activities and outcomes of Stage Worked with MOFR to review and update the documentation used to underpin the CSG, namely the Permit to Export Forest Produce and the Application for the Permit to Export Forest Produce. The revised documentation has been in use since January 2014 and is attached in Appendix D. 5. Developed a Procedure for Monitoring and Verification of Timber Legality, in consultation with the IWG and MOFR, which outlines monitoring and verification systems that are being used by MOFR to strengthen timber legality assurance, including inspections of timber yards and additional verification measures to confirm timber source. Implementation of the procedure began during March The procedure is attached in Appendix E. 6. Conducted a successful workshop with industry and government stakeholders in relation to the planned monitoring and verification activities (as outlined in the procedure). Further information on the workshop and outcomes is provided in Appendix F. 7. Worked with MOFR to identify budget requirements for the necessary monitoring activities of the Timber Utilisation Division (TUD), as well as produce related documentation of this budget need. This is to form the basis for submissions to the annual Solomon Islands Government budget process during July August Developed a discussion paper with MOFR exploring revenue and cost recovery mechanisms from its timber monitoring functions. The paper has been used as the basis for internal discussions among senior staff and includes the required budget for TUD monitoring activities (see #7 above). It is attached in Appendix G. 3.2 Progress against Deliverables Table 3-1 presents a summary of progress against the Stage 3 objectives as outlined above, and the project deliverables associated with these objectives , Version 1.0, 4 August

15 Table 3-1 Progress against Stage 3 objectives and deliverables Key tasks Status Comments Objective 1: Provide technical assistance to support the IWG in further development of timber legality assurance systems in Solomon Islands 1.1 In consultation with PHAMA Honiara office, provide technical input into the IWG including facilitation of IWG consultation to identify specific areas for strengthening VLO assurance processes and approvals, and appropriate methods for their implementation. Complete Several meetings have been held on an approximately monthly basis. Among other things, discussions and consultations during the meetings have considered: Measures to strengthen verification systems, feedback on which has been incorporated into systems being implemented by MOFR; Budget and resourcing issues for implementation of timber monitoring; and Consultation on bilateral engagement with Australian Government. Objective 2: Assist MOFR with the distribution and implementation of the timber legality guidelines, developed during Stage PHAMA will prepare and print hard copies of the completed guidelines. 2.2 In consultation with MOFR, ensure key stakeholders (sawn timber exporters and possibly selected timber importers in Australia and New Zealand) receive and are informed on the guidelines. As appropriate, provide other stakeholders with the guidelines e.g. Ministry of Environment and the Public Solicitor s Office. Complete Several copies (around 50) of the Timber Legality Assurance Guidelines for Solomon Islands have been printed as required through Stage 3. The legality assurance guidelines were updated (with minor amendments) during March 2014 and 400 copies printed professionally for use as a field manual. These have been made available through MOFR and PHAMA. Complete, ongoing Visits were made with MOFR to Honiara-based timber processors and exporters to provide copies of the legality assurance guidelines and to discuss their purpose and use. Meetings were held with processors and exporters from Noro or other locations while in Honiara or via phone. Meetings to discuss the guidelines have also been held with other forest industry stakeholders, Ministry of Environment, Climate Change Disaster Management and Meteorology; Customs and Excise Division; and the Public Solicitor s Office. Guidelines have been provided to importers through PHAMA and MOFR. This will continue on an ongoing basis. In this first instance, it is anticipated that recipients will include existing importers and importer associations and potentially then also other buyers that do not currently import from Solomon Islands. There is potential to engage with the Pacific Trade and Invest office in Sydney in this activity , Version 1.0, 4 August

16 Key tasks Status Comments 2.5 Follow up and provide clarification as required to ensure stakeholders understand the purpose and application of the guidelines, and to promote their use. Complete Ongoing meetings have been held with industry and government stakeholders throughout Stage 3. This has been facilitated in part through discussions during the IWG meetings. Other activities have also provided opportunities to continue discussions of the guidelines, such as visits with MOFR to stakeholders ahead of the workshop held during March Objective 3: Support MOFR in exchanges with Australian Department of Agriculture to complete the bilateral processes to develop CSG 3.1 Continue and extend engagement with Department of Agriculture to inform them on progress made in Solomon Islands and to clarify any technical issues regarding legality assurance requirements. 3.2 Facilitate and support liaison between MOFR and Department of Agriculture to develop a formal, bilaterally approved set of guidelines to be published by DAFF in accordance with Australia legislative requirements regarding legality assurance for timber imports. Complete Regular contact has been maintained with Department of Agriculture throughout Stage 3, including by phone, and letters exchanged between the Permanent Secretary of MOFR and counterparts in Department of Agriculture. In-person meetings were facilitated between MOFR and Department of Agriculture representatives at the Asia Pacific Forestry Commission meeting held in New Zealand during November Complete Department of Agriculture provided a draft Country- Specific Guideline for Solomon Islands and an associated Quick Reference Guide: Identifying legal timber from Solomon Islands in December These were reviewed by staff in MOFR and the Ministry of Environment, Climate Change, Disaster Management and Meteorology, who proposed some comments and edits. Further exchanges of letters occurred during early 2014, leading to coendorsement of the CSG in May Co-endorsement was confirmed on 12 May 2014 in a letter from Department of Agriculture to MOFR. The finalised CSG will be included as a schedule to Australia s Illegal Logging Prohibition Amendment Regulation 2013, which is expected to enter into full effect from November Objective 4 Assist MOFR and Industry in determining appropriate strengthening measures to improve verifications systems that underpin licensing and permitting systems for export 4.1 Consultative process with MOFR, IWG, and other agencies to strengthen verification systems and clarify approvals process. Complete Consultations have been conducted primarily through the four IWG meetings regarding existing verification systems and areas in which they might be strengthened. Outcomes of these discussions have been incorporated by PHAMA and MOFR into a Procedure for Monitoring and Verification of Timber Legality, which outlines improved systems for verification of timber processing and export (attached in Appendix E). Preliminary versions of some of the new monitoring forms to be used by MOFR were provided to industry stakeholders during November 2013 in conjunction with distribution of the timber legality assurance guidelines , Version 1.0, 4 August

17 Key tasks Status Comments 4.2 Further development, or revision, of existing licensing and permitting processes, e.g. issuing Permit to Export to timber exporters 4.3 Consider and recommend processes that will support more effective and efficient compliance and monitoring for licences, e.g. Felling Licences and Development Consent. Approach envisaged to include: Identifying points in the approvals process for revision and/or strengthening Documenting identified alternate or revised processes Through the IWG, supporting MOFR to implement revised processes to the point where the new procedure is recognised by stakeholders Potentially supporting operational trials of revised certification and approvals documentation to accompany export consignments. Complete PHAMA and MOFR have revised the documentation for the Permit to Export Forest Produce and the Application for a Permit to Export Forest Produce the key documentation permitting export of timber. Revisions have been made to formatting and to include additional detail that will allow improved verification of exports, such as: Species and volume exported; Container number/s; Date of export; and An Authorisation from the Commissioner of Forests. The revised documentation has been in use by MOFR since January Complete, ongoing As noted in 4.1 above, consultations have been conducted primarily through the IWG. Outcomes of these discussions have been incorporated into the Procedure for Monitoring and Verification of Timber Legality, which outlines improved systems for verification of timber processing and export, including inspections of timber yards and additional verification measures to confirm timber source. The systems outlined in the procedure are targeted at specific points in the production chain. These are: Monitoring the entry of logs or timber into sawmills or timber yards; Tracking timber through processing; Inspecting the packing of timber into containers for export; Verifying details provided in an Application for a Permit to Export; and Tracking and verifying the amount of timber exported from Solomon Islands. A workshop titled Monitoring and verification of the Solomon Islands timber industry was held on 4 March 2014 with industry and government stakeholders. The workshop outlined the planned monitoring and verification activities (as described in the procedure). The workshop was well received and industry stakeholders have since made a number of suggestions to MOFR and PHAMA regarding the verification systems. MOFR began implementation of the monitoring and verification systems during March 2014 with businesses in and around Honiara. At the time of writing, four inspections of timber businesses have been undertaken in Honiara since March. A review of implementation of the verification systems was completed during June 2014 and has recommended that continuing support be provided to MOFR. See discussion in Chapter , Version 1.0, 4 August

18 Key tasks Status Comments Objective 5 Assist MOFR in determining resourcing requirements, and identifying appropriate government budget and other funding sources, to ensure appropriate verification activities can be sustained; including examination of licencing revenue structure and potential improved cost recovery mechanisms 5.1 Engage in consultative processes with MOFR and other agencies as appropriate, e.g. Ministry of Finance, Prime Minister s Office, and Attorney General s Office. Work with MOFR to identify current status of resourcing and budget for timber licencing and approvals systems. This would focus on the TUD and possibly the Operations Division. Assist MOFR in defining resources and budgetary requirements to ensure adequate and sustainable resourcing for licensing and permitting systems to underpin market access. Assist MOFR in considering the potential for revising current fees and licensing structure based on identified funding needs. This will involve consideration of legislated fees and scope for recovery, and consultation with IWG and border Industry on potential cost recovery mechanisms. Complete, ongoing Complete, ongoing Consultations have been held with MOFR, predominantly the TUD, but also the Operations and Finance & Administration Divisions to understand resourcing and budget requirements for timber monitoring and verification. MOFR has advised that staff numbers are adequate but there is currently insufficient budget to undertake most of the required activities. Have worked with MOFR to develop an annual budget for TUD s required monitoring and verification activities and associated documentation articulating this budget need. As an additional scope item for Stage 3, PHAMA has supported MOFR s TUD to justify the necessary budget on the appropriate budget forms for submission into the Solomon Islands Government central budget planning process during July August Further discussion of this is provided in Chapter 4. In conjunction with MOFR, and concurrently with consideration of budget requirements, have developed a discussion paper, Revenue and cost recovery from monitoring and verification of the timber industry. The discussion paper considers the existing fees and licensing structure and identifies possible measures that could facilitate improved cost recovery and help to address the existing budget shortfall for MOFR s monitoring and verification functions. Reflective of the relevance of such considerations is the fact that the Permanent Secretary of MOFR had independently also requested that TUD prepare a paper on these topics. The discussion paper and associated annual budget for monitoring and verification activities are attached in Appendix G. This paper has been circulated among senior MOFR staff for comment and presented to the Permanent Secretary , Version 1.0, 4 August

19 Key tasks Status Comments In consultation with PHAMA Honiara office staff, assist MOFR in articulating resourcing and funding requirements to Solomon Islands Government and development partners. Complete, ongoing The outcomes of internal consideration of the measures identified in the discussion paper will, where appropriate, be incorporated into MOFR submissions made to the 2014 Solomon Islands Government budget process. The articulated budget shortfall and the need for the monitoring and verification activities will be communicated to other Government agencies and development partners, to raise awareness of the continuing need for adequate resourcing to help ensure ongoing market access. 3.3 Additional Stage 3 Scope Items Further to the above outcomes, the need for additional inputs to complete Stage 3 was noted during March These inputs then occurred through to 30 June 2014 and have allowed for finalisation of some key initiatives under Stage 3 and help to embed their implementation within MOFR. The objectives of these inputs were to: Provide support to finalise the bilateral dialogue processes with Australia on the CSG; Strengthen the initial support for budget development by MOFR by aligning further preparatory work with the Solomon Islands budget cycle preparation period; and Enable assessment of the operation of the verification procedures implemented (which began during March 2014). Progress against these additional project objectives is discussed in Chapter , Version 1.0, 4 August

20 4 PROJECT OUTCOMES Stage 3 of this project has played an important role in supporting Solomon Islands timber producers to maintain and potentially enhance market access for sawn timber exports, principally through bilateral engagement with key trading partners and through development and implementation of strengthened monitoring and verification systems in support of demonstration of legal timber origins. Key outcomes at the conclusion of Stage 2 of this project were the development of provisional legality assurance guidelines for Solomon Islands and the formation of the IWG. These outcomes have been progressed during Stage 3 and complemented by the bilateral engagement with Australia, introduction of strengthened verification systems for timber legality (framed around alignment to the requirements of Australian importers), and articulation of associated budget and resourcing requirements. 4.1 Legality Assurance Guidelines The legality assurance guidelines developed during Stage 2 were distributed to stakeholders within Solomon Islands during Stage 3. This has been promoted through the professional printing of the 400 copies of the guidelines into a field manual type publication and distribution of these copies to stakeholders in Solomon Islands, as well as to importers in key markets. These are now held by MOFR and PHAMA for ongoing distribution. It is anticipated that the legality assurance guidelines will complement the CSG (for Australian importers) in providing additional detail and guidance on completion of due diligence on Solomon Islands wood products, which is required to import into the various international markets that require assurance of timber legality. 4.2 The Industry Working Group The IWG has continued and grown in strength as a forum for government and industry collaboration. All of the activities undertaken in Stage 3 have been underpinned by consultation and helpful discussions with the IWG members. Members continue to be actively involved in the work of PHAMA and, as in Stage 2, have prioritised a set of proposed future activities that have subsequently been endorsed by the Solomon Islands MAWG. Some consideration has been given to how the IWG might continue in its own right beyond the term of the PHAMA program. A discussion of this is provided below. 4.3 Co-endorsement of a Country-Specific Guideline Engagement with the Australian Department of Agriculture on the development of a CSG for Solomon Islands, also initiated during Stage 2, has continued during Stage 3. Coendorsement of a finalised CSG for inclusion in the Illegal Logging Prohibition Amendment Regulation 2013 was confirmed on 12 May 2014 in a letter from the Department of Agriculture to MOFR. It is significant to note that the proactive engagement by Solomon Islands, through PHAMA, has led to Solomon Islands being the first country for which a CSG has been endorsed. The utility of this recognition of the framework for legal timber in Solomon Islands as a marketing feature and potential source of differentiation for Solomon Islands timber has been noted in , Version 1.0, 4 August

21 discussions with both industry and government. The potential benefits of this outcome could be enhanced by subsequent activities of PHAMA with the Solomon Islands timber sector. Rounding off this positive outcome for PHAMA, the timber industry and MOFR was a handover ceremony between DFAT and MOFR in Honiara on 9 July The Australian High Commissioner, Andrew Byrne, visited the Permanent Secretary of MOFR, Barnabas Anga, to symbolically hand over the printed legality assurance guidelines and congratulate MOFR on the recent co-endorsement of the CSG. Subsequent publicity on this event included radio items on Solomon Islands Broadcasting Corporation and newspaper coverage. Beyond meeting the requirements of the Australian Government s Illegal Logging Prohibition Amendment Regulation 2013, the documentation supporting the CSG will also provide comfort to importers in other countries in respect timber legality. For example, the New Zealand Timber Importers Association has a policy guiding their members in respect to timber imported from rainforest harvesting. Providing timber from Solomon Islands that is aligned with the Australian CSG will provide the New Zealand importers with greater comfort in respect to the legality aspect of the Association s rainforest policy. 4.4 Strengthening of Monitoring and Verification Systems The development of legality assurance guidelines and the CSG has been complemented by strengthening of monitoring and verification systems. Implementation of such systems is necessary to ensure compliance with the laws of Solomon Islands and to help support ongoing access to international markets. The objective of the activities described in the procedure for monitoring and verification systems (attached in Appendix E) is to ensure that the source of timber being exported from Solomon Islands is known and that its legal production can be verified. The procedure has been developed in consultation with the IWG and provided to industry during the stakeholder workshop to explain its implementation, which began during March Review of Implementation A review of implementation of the monitoring and verification systems was predominantly conducted during June 2014, complemented by ongoing contact with staff of MOFR throughout the period of implementation from March 2014 to present. Given the early stage of their implementation, it has not been appropriate to review the systems themselves in detail; rather, comments are provided on the extent of their implementation to date. At the time of writing, MOFR has conducted four inspections of timber businesses in Honiara using the procedure as attached in Appendix E. The initial visits largely focussed on ensuring awareness of the measures among timber businesses. Later visits have focussed on checking completion of the Wood Purchase Tally forms (which record the source and content of purchases made) and associated data collection, and conducting Timber Yard Inspections (to verify the source of timber in the yard) and Container Packing Inspections (to verify the source of timber as it is packed into containers). URS attended one of these latter visits to observe and to discuss the measures with industry and TUD staff (see Plate 4-1). The staff of TUD have been enthusiastic about implementation of the measures and have a good technical understanding of the requirements. Timber businesses have been receptive to , Version 1.0, 4 August

22 the measures (many making constructive suggestions regarding their implementation) and open to working with MOFR. Notwithstanding these encouraging initial outcomes, some key barriers to implementation have been evident. These are outlined below. Plate 4-1 MOFR staff verifying the source of timber at a sawmill in Honiara, July Constraints to Implementation Logistical issues have been the main constraint to implementation. This has led to TUD staff undertaking inspections on an approximately monthly basis rather than the planned fortnightly basis. The key constraint has been access to vehicles. Being a newly formed division, TUD does not have its own vehicle and must use those that are also used by other parts of the Ministry. In practice this has proved difficult and unavailability of vehicles has prevented more inspections from being undertaken. It appears that to resolve this situation, TUD will ultimately need permanent access to a vehicle. Another constraint relating to the availability of vehicles has involved TUD s ability to draw on funds allocated in its budget. TUD currently has sufficient allocation for fuel in its 2014 operational budget to allow for inspections in and around Honiara, but the process for accessing this has been slow (note that for 2014 there is not sufficient budget for TUD to undertake inspections in provincial locations). The reasons for this difficulty are internal financial procedural issues. It is apparent that a persistent focus within MOFR will need to be maintained for these measures to become established; this may be supported by improved funding under the 2015 MOFR budget Continuation and Expansion of Monitoring Activities It was envisaged by TUD that a Forest Officer would relocate from Honiara to Munda in around June 2014 in order to undertake inspections of timber businesses and exporters at the port of Noro and nearby. This has not yet occurred; however the officer to relocate has been notified and the internal administrative arrangements are reportedly largely in place. It is hoped that the officer can be established in Munda in the coming 3 to 4 months , Version 1.0, 4 August

23 The fundamental challenge for these monitoring and verification systems is the high proportion of timber that arrives for sale without a Milling Licence. The most effective means of improving this situation is to increase awareness and enforcement at the point of timber production. To this end, it is important that there is a presence of TUD staff (or others with equivalent roles) in provincial locations. Relocating an officer in Munda is an important first step. Beyond this, TUD is also hoping to place a further 3 to 4 officers in other provincial locations during These locations are understood to include Kirakira (Makira Province), Auki (Malaita Province), Buala (Isabel Province) and Taro (Choiseul Province). This initiative could serve to increase awareness of the requirement for Milling Licence as well as improve understanding of timber production and presentation among producers. Given the amount of timber sourced from outside Guadalcanal, it will be important that such initiatives are followed through. Any expansion of the geographic presence of TUD must be combined with ongoing implementation in Honiara. This should initially focus on the known dedicated timber businesses but should also seek to include the several smaller and ad hoc timber businesses that can exist at any given time. It is clear that the process of strengthening monitoring and verification will take some time. The proposed role and scope for PHAMA in providing continued support for this is outlined in Section below. 4.5 Budget Requirements for Monitoring and Verification Development and ongoing implementation of monitoring and verification functions by MOFR is dependent on resource and budget availability and, at present, there is a significant budget shortfall for these activities. To help address this, the MOFR TUD budget requirement for monitoring and verification activities has been articulated and an associated discussion paper (attached in Appendix G) developed that considers potential changes to fee and licensing structures and cost recovery mechanisms. This documentation will form the basis for submission to Solomon Islands Government budget processes and articulation of budget requirements within MOFR and with donors Budget Status The annual central Solomon Islands Government budget process typically occurs during May June each year; however, during 2014 this process has been delayed and will start during July. The main operational budget the Recurrent Budget process has recently been initiated. TUD has been given a nominal Baseline Budget for 2015 of around SBD900,000, which would be an approximately 80 percent increase from their 2014 Recurrent budget of SBD500,000. With this expected increase, TUD should have an improved budget position during It is understood that the Director of Utilisation is responsible for allocation of funds within this Baseline, which should ensure that monitoring and verification activities can be prioritised where appropriate. It is important to note that this process has yet to be finalised and the budget available to TUD will be subject to change. Given current indications, however, it can be expected that TUD will have a significantly higher operational budget than in Notwithstanding this likely , Version 1.0, 4 August

24 improved situation, there may well remain a budget shortfall for full implementation of the required monitoring and verifications systems, as well as the other functions of TUD. For context, the calculated annual budget need for TUD to adequately implement its monitoring and verification systems (excluding its other operational requirements, for which an indicative budget requirement could be in the order of $500,000) is around SBD400,000 per year. If available, this would allow TUD to conduct some monitoring of timber production through visits to each province as well as monitoring of timber processing and export through inspections to facilities in Honiara and Noro. 4.6 Consideration of Further Work During Stage 2 of this project, the IWG identified a range of activities that could be undertaken to strengthen the market access position for Solomon Islands timber exports. These potential activities were distilled into six specific initiatives as part of an industry-specific plan that could be undertaken beyond the scope of Stage 2. Three of these initiatives have been now undertaken as part of Stage 3, leaving a further three initiatives that can be considered for future work of PHAMA. During February 2014, the IWG considered the status of these initiatives and other activities that might support the market access position of Solomon Islands timber. The IWG confirmed its support for the initiatives, as previously articulated, and re-prioritised their implementation. This has resulted in changes to the priority of the initiatives from that previously given during Stage 2 (see Table 4-1 below). Subsequently, the Solomon Islands MAWG has endorsed the initiatives as prioritised by the IWG. Table 4-1 Activities identified by the IWG and their current status Activity Key tasks Status Priority 1 1. Ongoing support for IWG Ongoing provision of secretariat support to the IWG, for further 12 months. 2. Support development of CSG for timber legality assurance 3. Support for strengthening the verification systems for timber legality assurance 4. Support development of timber traceability systems 5. Strengthen timber grading systems and export product consistency Advisory support to MOFR and the IWG, and support bilateral engagement as needed. Advisory support to MOFR and the IWG. Technical review of proposed mechanisms. Scoping of systems to enable tracing of timber along supply chains. Enhance market access by increasing industry capacity to deliver more consistent timber products. Implemented in Stage 3 Implemented in Stage 3 Implemented in Stage 3 Future consideration Future consideration N/A N/A N/A Priority ranking as ascribed by the Timber IWG during February , Version 1.0, 4 August

25 Activity Key tasks Status Priority 1 6. Support industry focus on access to higher value markets for timber products Support industry to identify, scope and position for supply to higher value export markets; in particular, by leveraging from timber legality assurance and greater consistency in timber grading and other specifications. Future consideration The IWG s highest priority for continuing work by PHAMA is to support industry focus on higher value markets for timber products. A key component of this work would be engagement with key export markets (i.e. Australia, New Zealand) to understand the perspectives of current and potential importers in relation to Solomon Islands timber. Such an investigation could seek market perspectives on: 1 Legality assurance and certification requirements; Quality and consistency of supply of timber from Solomon Islands; Scope for development of value adding and development of higher value products; Consideration of potential new markets for Solomon Islands timber, particularly other Pacific Islands countries; and Consideration of buyer interest in supply of plantation teak. An element of such work could be potential collaboration with Pacific Agribusiness Research for Development Initiative (PARDI) and Australian Centre for International Agricultural Research (ACIAR) programs that are currently operating in Solomon Islands and have investigated the resource size and potential export markets for teak (Tectona grandis) grown in smallholder plantations. Likely collaboration would be in identifying potential industry contacts and in scoping discussion points with importers. The next priority as assigned by the IWG is to strengthen timber grading systems and export product consistency, and it is envisaged that the outcomes of the market investigation could inform such work. MOFR has expressed particular interest in this work, particularly in developing a common national timber grading system, for which a draft version has previously been developed. To facilitate this, MOFR has noted the possibility of holding an industry workshop during May 2014 to discuss timber grading and, thereafter, to develop a revised grading system in consultation with industry. PHAMA could support such a process, potentially providing technical input to any grading systems and supporting training and implementation of any revised system Continuation of the Industry Working Group PHAMA has given consideration as to how the IWG might continue in its own right beyond the term of the PHAMA program, with the intent of promoting ongoing collaboration between government and private sector and ensuring the sustainability of the outcomes achieved under PHAMA. It should be noted that in the coming 6 12 months, PHAMA will continue to provide secretariat support and technical inputs as appropriate. An option that has been raised is for the IWG to continue under the auspices of the Solomon Islands Chamber of Commerce and Industry (SICCI). In this context, a representative of SICCI , Version 1.0, 4 August

26 attended the most recent IWG meeting to familiarise themselves with the IWG and its activities. This early engagement with SICCI was well received and could be continued through subsequent IWG meetings. It is relevant to note that the sawn timber industry has, of its own accord, initiated discussions on the establishment of a sawn timber industry group that would act as a broader industry body. It is understood that this group included sawmillers and timber yards in Honiara, some of which are also represented in the IWG. These discussions occurred during the latter part of 2013; however, at the time of writing it is not clear whether any further activity is planned to develop this group. While the next steps of this particular initiative are unclear, it is suggestive of broad industry interest in ensuring appropriate representation Ongoing Support for Implementation of MOFR Monitoring and Verification Systems Further to the review of implementation of MOFR monitoring and verification systems described above, it is proposed that PHAMA continue to provide support to help ensure their appropriate and consistent implementation. This would initially involve a follow-up review to further assess the implementation of systems and consider their effectiveness and appropriateness. An appropriate timing for such a review could be during September October 2014, which would be approximately 6 months since the systems were first implemented and, ideally, would coincide with initiation of monitoring and verification activities in Western Province. It is suggested that the exact timing be co-ordinated with MOFR in order to best align with their program of activities. An indicative scope of this support and review would include the following: Consultation with TUD staff on the status of implementation of the systems; Consideration of TUD s budget position with regards to implementation of the monitoring and verification systems (pending conclusion of the Solomon Islands Government 2015 budget process); A visit to Western Province to review implementation of systems there (if appropriate) A 2 3 day visit to Munda and Noro, possibly with senior staff from TUD, to assess implementation of the verification systems and meet with timber businesses; Consideration of the appropriateness of the systems and proposal of amendments if required; Defining the potential alignment of awareness raising opportunities to improve timber production and presentation; and Consideration of the need for further support. The anticipated consulting inputs for such work are likely to be around days, pending confirmation of the scope of work. MOFR has raised the possible need to amend or update the legal instruments that underpin these monitoring and verification systems, so as to align them with current practices. The extent to which such measures would be required has not been confirmed and it is noted that the Forest Resources and Timber Utilisation Act and Regulations does provide the legal basis , Version 1.0, 4 August

27 for the verification activities. Given MOFR interest in this area, the implementation review could consider the need for such amendments, which if deemed necessary would likely involve revisions to existing Regulations or, potentially, drafting of new Regulations as appropriate. 4.7 Key Next Steps Subject to further support being made available through MOFR, the Solomon Islands timber industry, and potentially donor-funded programs, the key next steps proposed are engagement on the scope to provide support to activities as prioritised by the IWG in the forest sector industry plan. Specifically: 1. Supporting industry focus on access to higher value markets, and in working to strengthen timber grading systems and export product consistency. 2. Considering further support for implementation of MOFR monitoring and verification systems, including an additional input to review the systems during September October , Version 1.0, 4 August

28 5 LIMITATIONS URS Australia Pty Ltd (URS) has prepared this report in accordance with the usual care and thoroughness of the consulting profession for the use of the Department of Foreign Affairs and Trade and only those third parties who have been authorised in writing by URS to rely on this Report. It is based on generally accepted practices and standards at the time it was prepared. No other warranty, expressed or implied, is made as to the professional advice included in this Report. It is prepared in accordance with the scope of work and for the purpose outlined in the Tasking Note dated 10 October 2013 and amended 10 March Where this Report indicates that information has been provided to URS by third parties, URS has made no independent verification of this information except as expressly stated in the Report. URS assumes no liability for any inaccuracies in or omissions to that information. This Report was prepared in March 2014 and then updated in July 2014 and is based on the conditions encountered and information reviewed at the time of preparation. URS disclaims responsibility for any changes that may have occurred after this time. This Report should be read in full. No responsibility is accepted for use of any part of this report in any other context or for any other purpose or by third parties. This Report does not purport to give legal advice. Legal advice can only be given by qualified legal practitioners. Except as required by law, no third party may use or rely on this Report unless otherwise agreed by URS in writing. Where such agreement is provided, URS will provide a letter of reliance to the agreed third party in the form required by URS. To the extent permitted by law, URS expressly disclaims and excludes liability for any loss, damage, cost or expenses suffered by any third party relating to or resulting from the use of, or reliance on, any information contained in this Report. URS does not admit that any action, liability or claim may exist or be available to any third party. Except as specifically stated in this section, URS does not authorise the use of this Report by any third party. It is the responsibility of third parties to independently make inquiries or seek advice in relation to their particular requirements and proposed use of the site. Any estimates of potential costs which have been provided are presented as estimates only as at the date of the Report. Any cost estimates that have been provided may therefore vary from actual costs at the time of expenditure , Version 1.0, 4 August

29 APPENDIX A BILATERAL ENGAGEMENT ON DEVELOPMENT OF COUNTRY-SPECIFIC GUIDELINE Stage 3 of the project has involved facilitation of continued engagement between the Solomon Islands Government and the Australian Government on the bilateral development of a CSG. Correspondence between the two respective implementing agencies, the Solomon Islands MOFR and the Australian Government Department of Agriculture, consist of the following: Letter from MOFR to Department of Agriculture dated 31 January 2014; Letter from Department of Agriculture to MOFR dated 12 March 2014; Letter from MOFR to Department of Agriculture dated 17 March 2014; Letter from Department of Agriculture to MOFR dated 12 May 2014; and Letter from MOFR to Department of Agriculture dated 14 July , Version 1.0, 4 August 2014

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37 APPENDIX B COUNTRY-SPECIFIC GUIDELINE The Country-Specific Guideline for Solomon Islands and associated Quick Reference Guide: Identifying legal timber from Solomon Islands have been developed bilaterally between the Department of Agriculture and MOFR. These agencies subsequently co-endorsed these documents during May 2014 on behalf of the Governments of Solomon Islands and Australia , Version 1.0, 4 August 2014

38 Country specific guideline for Solomon Islands This guideline has been prepared by the Australian Government and the Government of Solomon Islands. It is intended to assist Australian importers of regulated timber products from Solomon Islands in understanding the regulatory framework in Solomon Islands in order for them to carry out their due diligence obligations under the Illegal Logging Prohibition Amendment Regulation 2013, which supports the Illegal Logging Prohibition Act This guideline was co-endorsed by the Australian and Solomon Islands governments on 12 May 2014.

39 Country specific guideline for Solomon Islands 2

40 Country specific guideline for Solomon Islands Contents What is required under the new law?... 5 What timber products are imported into Australia from Solomon Islands?... 7 Documents to show legality of timber... 7 How is timber harvesting regulated in Solomon Islands?... 8 Timber export regulation... 9 Sawn timber supply chains in Solomon Islands Prohibited exports from Solomon Islands Who should I contact for further information? Attachment A Permit to Export Forest Produce (example) Attachment B Felling Licence (example) Attachment C1 Milling Licence (issued with a Felling Licence) (example) Attachment C2 Milling Licence (incorporates permission for felling) (example) Attachment D Certificate of Origin (example)

41 Country specific guideline for Solomon Islands 4

42 Country specific guideline for Solomon Islands What is required under the new law? Australia s Illegal Logging Prohibition Act 2012 (the Act) restricts the movement of illegally logged timber into Australia for imported timber and timber products; and at timber processing mills, for domestically grown raw logs. The Act seeks to address the harmful environmental, social and economic impacts of illegal logging, including forest degradation, habitat loss and threats to sustainable livelihoods. The Act defines illegally logged as: in relation to timber, means harvested in contravention of laws in force in the place (whether or not in Australia) where the timber was harvested. The Illegal Logging Prohibition Amendment Regulation 2013 (the Regulation) prescribes due diligence for the regulated community, that is, Australian importers of regulated timber products (for the purposes of the Act a regulated timber product is a product listed in Schedule 1 to the Regulation) and Australian processors of domestic raw logs. Under the Regulation the regulated community has to undertake a due diligence process to minimise the risk of sourcing illegally logged timber. Due diligence requirements for importers include the following steps: Step 1: Information gathering Step 2: Assessing and identifying risk against a timber legality framework (optional) or a country specific guideline (optional) Step 3: Risk assessment (if required) Step 4: Risk mitigation (if required) Further information about the Act and the Regulation is available at the Australian Government Department of Agriculture s website (daff.gov.au/illegallogging). This guideline is intended to assist an importer of regulated timber products from Solomon Islands to comply with the due diligence requirements of the Regulation. Information or evidence listed in this guideline is not an exhaustive list of evidence or documentation required to satisfy due diligence requirements under the Regulation. The Regulation should be referred to for the information required to be gathered to satisfy due diligence requirements. 5

43 Country specific guideline for Solomon Islands Information gathered by applying this guideline, along with any other information gathered in accordance with the Regulation, needs to be assessed in accordance with the processes outlined in the Regulation to identify the risk that a regulated timber product is, is made from, or contains illegally logged timber. 6

44 Country specific guideline for Solomon Islands What timber products are imported into Australia from Solomon Islands? The regulated timber products that are currently produced in Solomon Islands comprise: HS Wood in rough HS Wood sawn, chipped lengthwise HS Sheets of veneer. The primary export from Solomon Islands to Australia in recent years has been sawn wood (HS 44.07). Documents to show legality of timber Evidence of compliance with Solomon Islands legislation may be obtained from official documents listed below. Mandatory requirement of proof of legality: a valid Permit to Export, approved by the Ministry of Forestry and Research (see Attachment A). Supplementary proof of legality: a valid Felling Licence (if required) (see Attachment B) a valid Milling Licence (see Attachment C1 and C2). Optional proof of legality: a Certificate of Origin from the Ministry of Forestry and Research, which accords with the information incorporated in the Permit to Export and the Milling Licence (see Attachment D). 7

45 Country specific guideline for Solomon Islands How is timber harvesting regulated in Solomon Islands? Harvesting occurs in locations throughout the country, generally by chainsaw. Varying levels of mechanisation are used in timber extraction depending on the scale of the operation, ranging from carrying timber by hand to the use of heavy machinery. Where harvesting occurs under a Felling Licence, an associated Milling Licence is also required to permit further processing. Such Milling Licences are issued where milling is conducted in conjunction with log export operations, under Clause 2(1)(a) of the Timber (Levy and Mill Licensing) Regulations to the Forest Resources and Timber Utilisation Act. This approvals process is typically applied for commercial scale logging operations, which are required to obtain a Development Consent from the Ministry of Environment, Climate Change, Disaster Management and Meteorology, and are required to submit annual Harvest Plans and more detailed Coupe Plans to the Ministry of Forestry and Research before harvesting can begin. Where harvesting occurs under a Milling Licence, both felling and further processing are permitted, under Clause 2(1)(b) of the Timber (Levy and Mill Licensing) Regulations. This approval process is typically applied to landowners that are harvesting and milling timber on their own land. Milling Licence holders who intend to use extraction machinery and/or produce more than cubic metres per year must also obtain a Development Consent and submit Harvest and Coupe Plans for approval. The objective of this planning process is primarily to ensure that harvesting operations are undertaken in accordance with the Code of Logging Practice (which is primarily focused on industrial scale operations rather than small landholder operations). Refer to the timber supply chains chart on page 9 for more information. 8

46 Country specific guideline for Solomon Islands Timber export regulation In Solomon Islands, sawn timber is shipped in containers, which are stacked on site at the relevant sawmill or timber yard. There are two container ports in Solomon Islands: Honiara and Noro. Most sawn timber produced in Solomon Islands for export markets is transported to Honiara for loading into containers and export through the port of Honiara. To export timber products from Solomon Islands, an exporter must obtain a Permit to Export, approved by the Ministry of Forestry and Research. The application for the Permit to Export must detail the relevant licence numbers, volume, species and value of the timber being exported, as well as documentation of the sale arrangements. The Commissioner of Forests, or someone acting in this position, is the only person authorised to approve a Permit to Export. The signature and stamp of the commissioner should appear on every permit, together with a unique numerical 'identifier'. An application for a Permit to Export can be made to the Commissioner of Forests for each export consignment. The Permit to Export includes the following information: licence number/s from which the timber has been sourced (which demonstrates the origin of the timber) name and address of seller and buyer container numbers of the timber being exported the species and volume of the timber. Additionally, the following documentation must be included with the application for the Permit to Export: packing list identifying the species and volume of timber to be exported evidence of the sale (which can include a purchase order and invoice, or similar). At the time of applying for a Permit to Export, an exporter has the option of applying for a Certificate of Origin. Issuing of a Certificate of Origin can occur wherever an associated Permit to Export has been approved. The Permit to Export is then provided to the Customs & Excise Division, which checks the contents of each consignment and determines the duty payable. Once this duty is paid the customs approval is issued. To comply with Australian biosecurity regulations, timber exporters are required to obtain a Phytosanitary Certificate, which in the Solomon Islands is issued by Biosecurity Solomon Islands. This certificate describes any fumigation that has been conducted for the specified container or containers. Note that fumigation is not a mandatory requirement for entry into some other markets. 9

47 Country specific guideline for Solomon Islands The Phytosanitary Certificate is not part of the Solomon Islands regulatory framework; therefore it is not a requirement within the Solomon Islands timber supply chain and does not appear on the supply chain chart on Page 9. 10

48 Country specific guideline for Solomon Islands Sawn timber supply chains in Solomon Islands 11

49 Country specific guideline for Solomon Islands Prohibited exports from Solomon Islands Primary species of timber exported from Solomon Islands include vitex (Vitex cofassus), akwa (or taun, Pometia pinnata), kwila (or merbau, Instia bijuga) and rosewood (Pterocarpus indicus). Collectively, these species account for a large proportion of current sawn timber production. Existing Solomon Islands legislation prohibits the export of some key commercial species except as processed timber that is, these species cannot be exported in roundwood (log) form. They are: vitex (Vitex cofassus), kwila (Intsia bijuga), rosewood (Pterocarpus indicus), and white beech or canoe tree (Gmelina moluccana). Additionally, some species may only be exported with approval from the Director of the Ministry of Environment, Climate Change, Disaster Management and Meteorology: these are: ngali nut (Canarium indicum) and tubi (Xanthostemon melanoxylon). Note that the timber product type and species for which sale and/or export are restricted may be subject to change. In the case that raw/round logs are exported to Australia, its supply chain would be similar to that for large scale commercial operations for sawn timber, except that a Specific Authority to Export rather than a Permit to Export would be required. 10

50 Country specific guideline for Solomon Islands Who should I contact for further information? Australian Government Department of Agriculture GPO Box 858 Canberra ACT 2601 Phone: daff.gov.au/illegallogging illegallogging@agriculture.gov.au Solomon Islands Government Ministry of Forestry and Research PO Box G24, Honiara Phone: or Fax: anga_b@mofr.gov.sb Disclaimer While reasonable efforts have been made to ensure that the contents of this guideline and the associated quick reference guide are factually correct, the Commonwealth of Australia does not accept responsibility for the accuracy or completeness of the contents and expressly disclaims liability for any loss or damage, however caused, that may be occasioned directly or indirectly through the use of, or reliance on, the contents of this guideline or associated quick reference guide. This guideline and its associated quick reference guide are made available on the understanding that the Commonwealth of Australia is not providing professional advice. Before relying on this guideline or its associated quick reference guide, readers should obtain appropriate professional advice suitable to their particular circumstances. Readers should also confirm that this is the most up-to-date available guideline by referring to the Department of Agriculture website. 11

51 Country specific guideline for Solomon Islands Attachment A Permit to Export Forest Produce (example) Each Permit to Export has a unique Permit Number. This number can be cross checked with the Solomon Islands Ministry of Forestry and Research, if required. This licence number refers to the Milling/Felling license, which demonstrates the origin of the timber. This information is specific to the timber export and can be used to comply with the information gathering requirements in r 10(2) of the Regulation. The Commissioner of Forests, or someone acting in this position, is the only person authorised to approve a Permit to Export. The signature and stamp of the Commissioner should be on every Permit. 12

52 Country specific guideline for Solomon Islands 13

53 Country specific guideline for Solomon Islands Attachment B Felling Licence (example) FORM B Forest Resources and Timber Utilisation Act (Cap.40) Forest Resources and Timber Utilisation (Felling Licences) Regulations 2005 Licensee (name and address): Date Licence takes effect: Date Licence expires: FELLING LICENCE Section 44, regulation 4) Licence No. Description of land licence applies to: (including province and locality where land is located) in ward, Time after issue of licence within which licensee to commence operations: Conditions of Licence: (1) The term of the licence is 5 years. (2) The licensee shall pay the prescribed annual fee (if any) on being granted the felling licence and then on the date in each year that is the anniversary of the date the licence was granted. (3) The licensee shall carry out his operations under the licence only within the area of land to which the licence applies, the boundaries of which are marked in red on the map issued by the Department of Lands and Survey, or the good quality certified copy of such a map, of the scale 1:50,000 or larger attached to the licence... Signed Commissioner of Forest Resources Date: 14

54 Country specific guideline for Solomon Islands (4) Any disputes relating to the ownership, boundaries or use of the land, or a part of the land, to which the licence applies shall be determined in accordance with the law of Solomon Islands. (5) The licensee shall conduct his operations under the licence in a manner that complies with the approved timber rights agreement, the conditions of the licence, the Act and subsidiary legislation made under the Act. (6) The licensee shall conduct his operations under the licence in a manner that complies with the Revised Solomon Islands Code of Logging Practice, May 2002 published by the Ministry of Forests, Environment and Conservation. (7) The licensee shall act in accordance with the agreement he certifies on his application for the grant of the licence; (8) Before commencing carrying out any operations under the licence, the licensee shall enter into, and give to the Commissioner of Forests Resources a copy of, a performance bond of $250,000 that shall (a) be in the form of a bank guarantee or equivalent instrument acceptable to the Central Bank of Solomon Islands; and (b) provide security for (i) (ii) payment of taxes, duties, levies, fees, royalties, rent, compensation and other charges or amounts that may be payable by him as licensee to the Government or the relevant provincial government under this Act or a provincial ordinance; and payments arising from a contravention of the conditions of the licence, the Act and subsidiary legislation made under the Act; and (c) be enforced by the Commissioner of Forest Resources against the issuing bank, insurance company or other authority if the licensee fails to pay a sum secured by it. (9) The licensee shall maintain the performance bond until he receives from the Commissioner of Forest Resources a written release from the performance bond in accordance with Form C. 15

55 Country specific guideline for Solomon Islands (10) The licensee shall pay all taxes, duties, levies, fees, royalties, rent, compensation and other charges or amounts as they fall due and payable by him as licensee to the Government or the relevant provincial government under the Forest Resources and Timber Utilisation Act or a provincial ordinance. (11) Subject to conditions (12) and (13), the volume of logs felled under the licence in a year shall not exceed the volume of logs specified by the Commissioner of Forest Resources as the maximum volume that may be felled under the licence during the year. (12) If the maximum volume of logs that may be felled in a year is not felled, the licensee may carry forward into the remaining years of the term of the licence the volume of logs not felled. (13) Logs that are 30 cm or more, but not more than 49cm, in diameter and less than 6 metres long shall not be included in the volume of logs felled referred to in conditions (11) and (12) if the licensee makes every endeavour to find a market for, and sell, those logs. (14) The licensee shall not carry out felling operations under the licensee s felling licence in a year during the term of the licence unless he has prepared, in accordance with the code of logging practice, an annual harvesting plan for the year and the Commissioner of Forest Resources has approved the plan. (15) The Licensee shall not commence felling operations in a coupe unless he has prepared, in accordance with the code of logging practice, a coupe plan for the coupe and the forest officer authorized to do so has approved the coupe plan. (16) The licensee shall comply with the directions (if any) given to him by the Commissioner of Forest Resources for the purpose of good silviculture, including the minimum girth of trees for seed bearing or regeneration. (17) The licensee shall take all necessary steps to prevent pollution of the ground, and any pond, river, stream or water source, including the following; (a) (b) ensuring all oil, fuel, chemicals and other pollutants are stored in secure containers and safeguards are in place to prevent accidental contamination of any water or soil; not allowing refuse, rubbish, sewage, oil, fuel or other pollutants to be discharged into any pond, river, stream or water source. (18) The licensee shall comply with the River Waters Act (Cap 135), and subsidiary legislation made under that Act, and shall ensure that all his officers and employees are aware of their obligations under that Act. 16

56 Country specific guideline for Solomon Islands (19) The licensee shall ensure that the working practices carried out under the licence are safe and shall comply with all relevant laws, including the Act and subsidiary legislation made under the Act, the Safety at Work Act (Cap 74) and any directions given from time to time by the Commissioner of Labour for the prevention of accidents and securing safe working conditions for his officers and employees. (20) The licensee shall ensure that all trees felled under the licence are felled so as to minimize waste and produce the maximum volume of merchantable timber. (21) The licensee shall remove all logs from where they are harvested to storage areas within 3 months after felling the timber, but in any case as soon as is necessary, to prevent damage to the timber by decay, insects, fungus or disease. (22) The licensee shall at all times allow the Commissioner of Forest Resources or a forest officer access without notice to all and any areas of the licensee s operations including any vehicles, facilities, equipment or premises, for the purposes of ascertaining whether or not the licensee is contravening the licence, the Act or subsidiary legislation made under the Act. (23) The licensee shall at all times allow the Commissioner of Forest Resources or a forest officer access to any timber obtained under the licence for the purpose of inspecting the timber and for ascertaining the following; (a) (b) (c) (d) the volume, species and grade of the timber; whether there has been any degradation of the timber since it was felled. Whether the timber is timber felled under the licence; Whether the timber is of suitable quality for the purpose for which it is to be used. (24) The licensee shall keep true and proper records, of his operations carried out under his felling licence, which shall include (a) (b) (c) (d) a record of the species of timber felled, sawn, sold or exported; a record of the areas where timber is felled and a record showing which timber is taken from which area; a record of the volume of timber felled, sawn, sold or exported; a record of the value of timber sold or exported; 17

57 Country specific guideline for Solomon Islands (e) (f) (g) (h) (i) (j) (k) (l) (m) copies of all documentation for exporting of logs and sawn timber; copies of all documentation required for importing machinery used by the licensee; the royalties payable and paid to the owner of land; reforestation activities carried out; conservation and rehabilitation activities carried out; the amount of duty payable on exported timber and, of that amount, the amount of duty paid and the amount of duty remitted; a copy of each annual plan and coupe plan approved in accordance with regulation 12; a copy of his application for his felling licence and all accompanying documents; and a copy of his felling licence. (25) The licensee shall have respect for and interfere as little as possible with the rights of the owner of the land and any other person who has an interest in or a right to carry out activities on, the land on which the licence has effect (which, if the land is customary land, includes hunting, fishing and collecting, felling and taking away trees on other materials for domestic or traditional purposes). (26) The licensee shall take all reasonable steps to ensure that his officers and employees are respectful to and observant of local customs and will not enter cultural areas, such as tambu areas and garden and village areas. (27) The licensee shall not transfer, assign or dispose of the licence but may, with the Commissioner of Forest Resource s approval in writing, enter into a subcontracting arrangement for the carrying out of operations under the licence. (28) If the licensee is required to be authorized under or comply with an Act other than the Forest Resources and Timber Utilization Act (Cap 40) or a provincial ordinance for conducting the felling operations authorized by the licence, the licensee shall maintain that authorization and shall not contravene that Act or provincial ordinance. (29) The licensee may, at any time, surrender the licence by giving to the Commissioner of Forest Resources 6 months notice in writing of his intention to surrender the licence. 18

58 Country specific guideline for Solomon Islands (30) On the expiry, surrender or cancellation of the licence, the licensee remains liable for (a) (b) (c) an act or omission done, caused or permitted or made by him as the licensee prior to the expiry, surrender or cancellation; a liability incurred by him as the licensee under this Act prior to the expiry, surrender or cancellation; and complying with the requirements relating to completing his operations and departing from the land to which the licence applied and to being released from his performance bond. (31) If the licence is about to expire or has been cancelled; or the licensee is about to cease operations under his licence, the licensee shall complete his operations in a manner that is satisfactory to the Commissioner of Forest Resources or a forest officer authorized for that purpose by the Commissioner of Forest Resources, and in particular shall have (a) (b) (c) (d) (e) (f) (g) rectified, to the satisfaction of an inspector under the River Waters Act (Cap 135), any damage to a pond, river, stream or water source caused by carrying out operations under the licence; cleared all ponds, rivers, streams and watercourses of obstructions, dams and temporary culverts caused or constructed when carrying out operations under the licence; dammed and drained all skidding tracks on slopes; ripped, to broken up soil compaction, all Yarding and working areas on the land subject to the licence and spread topsoil evenly back across the disturbed areas; removed, and satisfactorily disposed of, all oil, chemical and similar pollutants and rubbish from the land subject to the licence; restored all quarries, pits and gravel extraction areas on the land subject to the licence applied to a safe and environmentally acceptable condition; filled or drained areas of stagnant water created by operations on the land subject to the licence; 19

59 Country specific guideline for Solomon Islands (h) (i) carried out a thorough final maintenance of all roads and bridges on the land subject to the licence and left materials for future repairs and maintenance in accordance with the approved timber rights agreement; and paid all taxes, duties, levies, fees, royalties, rent, compensation and other charges or amounts that payable to the Government or the relevant provincial government by him as licensee under this Act or a provincial ordinance. (32) Any building, structure or apparatus erected or placed by the licensee on the land subject to the licence shall, on the expiry of 12 months after the licensee ceases operations under the licence (for whatever reason), become the property of the owner of the land. Any other conditions: (1) Production quota per annum: (2) Allowable Export quota per annum: (3) Allowable volume input of Sawn timber per annum: Signed.. Commissioner of Forest Resources Date:.. Attach a map issued by the Department of Lands and Survey, or a good quality certified copy of such a map, of scale 1:50,000 or larger, with the boundaries of the area of land to which the licence applies marked in red. 20

60 Country specific guideline for Solomon Islands Attachment C1 Milling Licence (issued with a Felling Licence) (example) NOT TRANSFERABLE Reg. 2(1) (a) Licence No: Date of issue: Date of expiry: THE FOREST RESOURCES AND TIMBER UTILISATION ACT THE TIMBER (LEVY AND MILL LICENSING) REGULATIONS LICENCE TO OPERATE A MILL (Where the licensee is authorized to fell trees by a license issued under section 5 of the ACT) Subject to the provisions of the Act and any Regulations made thereunder in force from time to time during the currency of this license and to the under-mentioned conditions. License is hereby granted to: (Name): of (address (herein after called the Licensee) to install and operate mills/ mill at/ within: (place or area) under Felling Licence Conditions 1. The licensee shall only produce sawn timber and shall not produce any other form of milled timber save under and in accordance with the terms and conditions of the prior written approval of the Commissioner of Forests. 2. No timber may be milled other than timber from trees which have fallen or been felled within (areas) Felling Licence it shall be the responsibility of the Licensee to ascertain the place in which trees have fallen or been felled. Provided that timber from trees which have fallen or been felled outside the said area covered by the License/authority may also be milled with the specific written approval of the Commissioner of Forests. 3. The licensee shall not produce more than (quantity) m3/annum timber in any one calendar year without the approval of the Commissioner, nor shall the licensee produce any other form of milled timber in excess of the quality authorized by the Commissioner of Forest Resources under Condition 1 hereof. 21

61 Country specific guideline for Solomon Islands 22

62 Country specific guideline for Solomon Islands 4. The licence shall not acquire log timber in excess of quantities notified to him in writing by the Commissioner of Forest Resources (which in the opinion of the Commissioner are sufficient to produce the maximum output of milled timber authorized under conditions 1 and 2 hereof). 5. The licensee shall have records of log timber acquired, log timber milled and milled timber produce, sold, supplied and exported and the value thereof in such manner and to such extend as the Commissioner of Forest Resources may require and shall render to the Commissioner of Forest Resources such returns of the same at such intervals and in such manner as the Commissioner of Forest Resources may require. All such records as aforesaid shall at all reasonable timber be open to inspection by the Commissioner of Forest Resources or any other Forest Officer authorized in writing in that behalf by the Commissioner of Forest Resources. 6. The Licensee shall ensure that his working practices are sage and comply with such direction (of any) as may from time to time be given by the Commissioner of Labour for the prevention of accidents and securing safe working conditions for employees. 7. The Licence is not negotiable or transferable. 8. The Commissioner of Forest Resources may cancel this Licence if the Licensee shall commit an act of bankruptcy or have a receiving or made against him or if distress or execution be levied against the mill/mills licensed hereunder or if proceedings be commenced for winding up the Licensee. 9. The Licensee shall not cease production of milled timber for any period in excess of three months without the prior written approval of the Commissioner of Forest Resources. G.T.R. No: Dated... Commissioner of Forests Note: The Licensee should study the Forest Resources and Timber Utilization Act and the Timber (Levy and Mill Licensing) Regulations. Section 39 of the Act empowers the Commissioner of Forest Resources to cancel or suspend this Licence for contravention of any of its terms and conditions or any of the provisions of the Act or Regulations. 23

63 Country specific guideline for Solomon Islands Attachment C2 Milling Licence (incorporates permission for felling) (example) NOT TRANSFERABLE Reg. 2(1) (b) Licence No: Date of issue: Date of expiry: THE FOREST RESOURCES AND TIMBER UTILISATION ACT THE TIMBER (LEVY AND MILL LICENSING) REGULATIONS LICENCE TO OPERATE A MILL (Where the licensee is not authorized to fell trees by a license issued under section 5 of the ACT) Subject to the provisions of the Act and any Regulations made thereunder in force from time to time during the currency of this license and to the under-mentioned conditions. License is hereby granted to: (Name).. of (address. (herein after called the Licensee) to install and operate mills/ mill at/ within: (place or area).. Conditions 1. The licensee shall only produce sawn timber and shall not produce any other form of milled timber save under and in accordance with the terms and conditions of the prior written approval of the Commissioner of Forests. 2. No timber may be milled other than timber from trees which have fallen or been felled within (areas) as above it shall be the responsibility of the Licensee to ascertain the place in which trees have fallen or been felled. Provided that timber from trees which have fallen or been felled outside the said area covered by the License/authority may also be milled with the specific written approval of the Commissioner of Forests. 3. The licensee shall not produce more than (quantity) m3/annum timber in any one calendar year without the approval of the Commissioner, nor shall the licensee produce any other form of milled timber in excess of the quality authorized by the Commissioner of Forest Resources under Condition 1 hereof. 24

64 Country specific guideline for Solomon Islands 4. The licence shall not acquire log timber in excess of quantities notified to him in writing by the Commissioner of Forest Resources (which in the opinion of the Commissioner are sufficient to produce the maximum output of milled timber authorized under conditions 1 and 2 hereof). 5. The licensee shall have records of log timber acquired, log timber milled and milled timber produce, sold, supplied and exported and the value thereof in such manner and to such extend as the Commissioner of Forest Resources may require and shall render to the Commissioner of Forest Resources such returns of the same at such intervals and in such manner as the Commissioner of Forest Resources may require. All such records as aforesaid shall at all reasonable timber be open to inspection by the Commissioner of Forest Resources or any other Forest Officer authorized in writing in that behalf by the Commissioner of Forest Resources. 6. The Licensee shall ensure that his working practices are sage and comply with such direction (of any) as may from time to time be given by the Commissioner of Labour for the prevention of accidents and securing safe working conditions for employees. 7. The Licence is not negotiable or transferable. 8. The Commissioner of Forest Resources may cancel this Licence if the Licensee shall commit an act of bankruptcy or have a receiving or made against him or if distress or execution be levied against the mill/mills licensed hereunder or if proceedings be commenced for winding up the Licensee. 9. The Licensee shall not cease production of milled timber for any period in excess of three months without the prior written approval of the Commissioner of Forest Resources.... Commissioner of Forests G.T.R. No: Note: The Licensee should study the Forest Resources and Timber Utilization Act and the Timber (Levy and Mill Licensing) Regulations. Section 39 of the Act empowers the Commissioner of Forest Resources to cancel or suspend this Licence for contravention of any of its terms and conditions or any of the provisions of the Act or Regulations. 25

65 Country specific guideline for Solomon Islands Attachment D Certificate of Origin (example) 26

66 APPENDIX C TIMBER LEGALITY GUIDELINES The Timber Legality Assurance Guidelines for Solomon Islands were distributed among processors and exporters during October November Minor updates to the guidelines were later made during March The version below has been professionally printed, with copies made available to stakeholders through MOFR and PHAMA , Version 1.0, 4 August 2014

67 Timber Legality Assurance Guidelines for Solomon Islands July 2013

68 CONTENTS Guidance for exporters and importers 1 Background to international timber legality requirements 1 Australia s requirements for timber legality assurance 2 The Solomon Islands sawn timber sector 3 What does timber legality look like in the Solomon Islands? 4 Guidelines for timber importers 7 Risk assessment criteria 8 Further considerations 9 Review of guidance material 9 Attachments Attachment A Attachment B Attachment C1 Attachment C2 Attachment D Permit to Export Felling Licence Milling Licence Type (a), which is issued in association with a Felling Licence Milling Licence Type (b), which incorporates permission for felling Certificate of Origin Prepared, printed and distributed with assistance from the Australian Government, through the Pacific Horticultural and Agricultural Market Access Program (PHAMA). PHAMA works with government and private sector in selected Pacific Island countries to help gain, maintain and improve access to export markets for selected primary sector products. For further details please visit the program s website at PHAMA, managed by URS Australia Pty Ltd Kalang, is an Australian aid project, funded by the Australian Government.

69 TIMBER LEGALITY ASSURANCE GUIDELINES FOR SOLOMON ISLANDS Guidance for timber exporters and importers This guidance is to support timber exporters in the Solomon Islands and importers in ensuring the production and sale of legal timber from the Solomon Islands. Specifically, this guidance is intended to assist importers and processors to undertake due diligence for importing timber products from the Solomon Islands, particularly in accordance with Australia s legislative requirements that prohibit the importation of illegally logged timber. This guidance also provides a tool for Solomon Islands exporters, to assist in ensuring the timber they export is produced and processed in compliance with the necessary approvals and licences. This should support exporters to communicate legality requirements to their customers in Australia and in other international markets. Note this is guidance material only and intended to be a ready reference to requirements in the Solomon Islands and Australia. Further detailed information to ensure compliance may need to be sought, as required. Background to international timber legality requirements Australia s Illegal Logging Prohibition Act 2012 (the Act) received Royal Assent on 28 November From 29 November 2012, the importation of illegally logged timber and the domestic processing of Australian grown illegally logged raw logs is prohibited. From 30 November 2014, Australian importers of regulated timber products will be required to: conduct due diligence in order to reduce the risk that illegally logged timber is imported or processed; and provide declarations, at the time of import, to Customs about the due diligence they have undertaken. Regulations setting out the list of regulated timber products, due diligence requirements and the applicable civil penalties were tabled in the Australian Parliament in May These comprise amendments to the Illegal Logging Prohibition Regulation 2012, registered on 11 December 2012, and detail the required components of a due diligence system. Australia s policy and legislative settings are broadly aligned with legislative developments in other major importer countries, including the United States of America (USA) and European Union (EU) Member States. In the USA, the Lacey Act amendments of 2008 mean that US-based timber importers are now required to exercise due care to ensure timber legality. Credible third party verification of legality or forest management certification can be used as one means of demonstrating this due care. More recently, EU Member States introduced the EU Timber Regulation in March This regulation prohibits illegally harvested timber from being placed on the EU market, and sets out mandatory procedures for those trading in timber within the EU to minimise the risk of illegal timber being sold. Also, in New Zealand, the government has in place a policy to address illegal logging and associated trade. In this context, the New Zealand and Australian Governments have agreed to an Arrangement on Combating Illegal Logging and Promoting Sustainable Forest Management. The Arrangement will reportedly promote systems to verify the legality of timber and wood products in Australia, New Zealand and the Asia Pacific region. It is reasonable to expect that the introduction of legality assurance systems in major import markets (e.g. the US and the EU) will establish due diligence requirements that extend through international trade to upstream processors and remanufacturers around the world. Any associated trends in the international timber trade will have implications for the entire supply chain, which may lead to increased customer interest in the source and legality of Solomon Islands timber and logs. 1

70 TIMBER LEGALITY ASSURANCE GUIDELINES FOR SOLOMON ISLANDS Australia s requirements for timber legality assurance Australia s legislation and regulation requires timber importers to establish a system of procedures and measures (a due diligence system) to minimise the risk that regulated timber products they import include, or are made from, illegally logged timber. Australian domestic processors are also required to establish a due diligence system to minimise the risk of processing illegally logged raw logs. Central to this regulation is the definition of illegally logged. A key component of Australia s definition is that the applicable legislation of the country of origin has been complied with. Under Australia s regulation, the applicable legislation means the legislation in force in the country, state or territory of harvest, covering the following matters: i. rights to harvest timber within legally gazetted boundaries; ii. payments for harvest rights and timber including duties related to timber harvesting; iii. timber harvesting, including environmental and forest legislation including forest management and biodiversity conservation, where directly related to timber harvesting; and iv. third parties legal rights concerning use and tenure that are affected by timber harvesting. As such, importers will require their suppliers in the Solomon Islands (i.e. exporters) to provide assurance their timber products are produced in compliance with Solomon Islands laws and regulations. These Australian requirements are broadly aligned with the existing requirements introduced in other countries, notably within the EU Member States, although some additional aspects of assurance may be required in other jurisdictions. Regulated timber products The Australian regulation specifies regulated timber products that are covered by the legislation. The Australian list of regulated timber products is similar to that used by the EU Member States, with some exceptions where the imports of those products to Australia were of low trade value and/or volume. The regulated timber products that are currently, or might soon be, produced in the Solomon Islands comprise 1 : HS Wood in rough HS Wood sawn, chipped lengthwise HS Sheets of veneer Other regulated timber products that are not currently produced in the Solomon Islands include particleboard; fibreboard; plywood; wood pulp; newsprint and other paper products. Recognised timber legality frameworks The Australian regulation recognises a designated set of timber legality frameworks that are able to satisfy, in part or entirely, the due diligence requirements for timber products. These recognised frameworks, as at May 2013, comprise: 1. EU FLEGT licensing scheme for imports of timber into the European Community 2 ; 2. Forest Stewardship Council (FSC) forest management certification scheme; and 3. Programme for Endorsement of Forest Certification (PEFC) Sustainable Forest Management certification. Where an importer can obtain credible evidence the timber products they are importing are produced in accordance with one of these frameworks, including valid certificates supported by the third party verification processes, this can be used to satisfy due diligence requirements in this way. Otherwise, importers will need to undertake further due diligence for timber legality assurance (see Guidelines for timber importers ). Country Specific Guideline for Solomon Islands In undertaking due diligence on potential timber purchases, importers in Australia can refer to the Country Specific Guideline for Solomon Islands. This guideline has been prepared by the Australian Government and the Government of the Solomon Islands. It forms part of the Illegal Logging Prohibition Amendment Regulation 2013 which supports the Illegal Logging Prohibition Act Regulated products are identified by the international Harmonised System (HS) for tariff nomenclature. 2 There is not currently an EU FLEGT licencing scheme in place in the Solomon Islands. As such it is not possible for timber exported from the Solomon Islands to carry such licences as documentation of timber legality. 2

71 TIMBER LEGALITY ASSURANCE GUIDELINES FOR SOLOMON ISLANDS The Solomon Islands sawn timber sector This guidance relates primarily to sawn timber production and export, as key markets for these products notably Australia and also New Zealand are introducing requirements for timber legality assurance. However, consideration is also given to log exports due to the related supply chains and approvals processes for the production and export of logs and sawn timber. s Timber harvesting An overview of the typical supply chain for Solomon Islands sawn timber production and export is set out below, and provides context for the consideration of timber legality assurance for sawn timber products. In accordance with Australian regulations, timber importers will need to establish due diligence systems for their own specific supply chains. s Primary processing 1. Timber harvesting Harvesting occurs in locations throughout the country and is done by chainsaw. Varying levels of mechanisation are used in timber extraction depending on the scale of the operation, ranging from carrying timber by hand to the use of heavy machinery. Timber harvesting can broadly be considered as either large (industrial scale operations) or small scale (community or village based operations). s Shipping to aggregation points and sawmills s Secondary domestic processing 2. Primary processing Primary processing of logs is often done locally, either in the forest or at a local aggregation point, using portable mills or chainsaws. Such processing is similar in nature whether undertaken by small scale or larger scale operations. 3. Shipping to aggregation points and sawmills Where primary processing has been done locally, flitches (squared logs) are shipped to Honiara or Noro (in the Western Province) for further processing. Where no local primary processing has been undertaken, logs are shipped to Honiara or Noro for processing by sawmills. 4. Secondary domestic processing Further processing of flitches or logs is primarily undertaken in Honiara. Timber exports from the Solomon Islands are currently limited to predominantly roughsawn timber. While Solomon Islands sawmills have capacity to produce timber flooring and moulded products, these are currently sold to the domestic market. 5. Preparing for exports Sawn timber is shipped in containers, which are stacked on site at the relevant sawmill or timber yard. There are two container ports in Solomon Islands, Noro and Honiara. At present most timber is exported from Honiara with relatively lower volumes from Noro. s Preparing for exports 3

72 TIMBER LEGALITY ASSURANCE GUIDELINES FOR SOLOMON ISLANDS What does timber legality look like in the Solomon Islands? The primary legislation for managing timber harvesting and the export of timber products is the Forest Resources and Timber Utilisation Act 1969, and its amendments over time. An overview of the regulatory framework for export of both logs and sawn timber products is set out below. Overview of regulatory framework for log exports (which may direct logs to sawmilling operations) Primary legislation Environment Protection Act (1998) Forest Resources and Timber Utilisation Act (1969) (8 subsequent amendments) Regulations Prescribed forms FORM 1 Fees FORM 2 Levy & mill licencing FORM 4 Protected species FORM 3 Approval for negotiation to approve timber rights Certificate of customary ownership Agreement for timber rights. Standard Logging Agreement Approving timber rights agreement negotiation Licencing Development Consent for harvest areas Felling Licence Payment of Performance Bond Market Price Certificate Specific Authority to export round logs Requires Environmental Impact Statement Harvest Plan For log exports Customs Approval (C25 Form) Forest management Coupe Plan Logging in compliance with Code of Logging Practice For sawn timber Export duties paid Bill of Lading Export arrangements Milling Licence Phytosanitary Certificate Certificate of Origin Refer to sawn timber regulatory framework links to Milling Licence Type (a) If requested by exporter Key evidence to support timber legality assurance Other components of the regulatory framework Key conditions and activities along supply chain 4

73 TIMBER LEGALITY ASSURANCE GUIDELINES FOR SOLOMON ISLANDS Overview of regulatory framework for sawn timber production and timber exports Primary legislation Environment Protection Act (1998) Forest Resources and Timber Utilisation Act (1969) (8 subsequent amendments) Regulations Prescribed forms Fees Levy & mill licencing Protected species Application for Milling Licence Licencing Forest management Export arrangements Development Consent for harvest areas Requires Environmental Impact Statement Key evidence to support timber legality assurance Other components of the regulatory framework Key conditions and activities along supply chain YES Harvest Plan Coupe Plan Type (b) Licence that incorporates permission for felling If extraction machinery used, or annual production >1,000 m 3 NO Logging in compliance with Code of Logging Practice Milling Licence Milling Type (a) Licence that is issued in association with a Felling Licence Container packing Permit to Export Customs Approval (C25 Form) Export duties paid Phytosanitary Certificate Point of linkage to log export regulatory framework Certificate of Origin If requested by exporter 5

74 Approval process for production and export of sawn timber This section describes the approval processes for production and export of sawn timber from the Solomon Islands, as depicted in the overview of the regulatory framework above. Where harvesting occurs under a Felling Licence, an associated Milling Licence is also required to permit further processing. Such Milling Licences are issued where milling is conducted in conjunction with log export operations, under clause 2(1)(a) of the Timber (Levy and Mill Licensing) Regulations to the Forest Resources and Timber Utilisation Act. This approvals process is typically applied for commercial scale logging operations, which are required to submit harvest and coupe plans before harvesting can begin. Where harvesting occurs under a Milling Licence, both felling and further processing are permitted, under clause 2(1)(b) of the Timber (Levy and Mill Licensing) Regulations. This approval process is typically applied for landowners that are harvesting and milling timber on their own land. Milling Licence holders who intend to use extraction machinery and/or produce more than 1,000 cubic metres per year must also submit annual Harvest Plans, and more detailed Coupe Plans to the Ministry of Forestry and Research for approval. The objective of this planning process is primarily to ensure that harvesting operations are undertaken in accordance with the Code of Logging Practice (which is primarily focused on industrial scale operations rather than small landholder operations). Most sawn timber produced in the Solomon Islands for export markets is transported to Honiara for loading into containers and export through the port of Honiara. To export timber products, an exporter must also obtain a Permit to Export, which is approved by the Ministry of Forestry and Research. The application for the Permit to Export must detail the relevant licence numbers, volume, species, and value of timber being exported, as well as documentation of the sale arrangements. At the time of applying for a Permit to Export, an exporter has the option of applying for a Certificate of Origin. Issuing of the Certificate of Origin can occur wherever an associated Permit to Export has been approved. The Permit to Export is then provided to the Customs & Excise Division, which checks the contents of each consignment and determines the duty payable. Once this duty is paid the Customs approval is issued. An exporter must also obtain a Phytosanitary Certificate, which is issued by Biosecurity Solomon Islands. This certificate describes any fumigation that has been conducted for the specified container or containers. Note that fumigation is not a mandatory requirement for entry into some markets. Exporters will need to have obtained these approvals to provide assurance of timber legality from the Solomon Islands. 6